Editorial: Don’t let PAYGO become PAYMORE 

Who said this? "No new deficit spending, no new bridges to nowhere, heaping mountains of debt on our children." And this? "If you want to have a new program, figure out a way to pay for it without raising taxes." Ronald Reagan? George Bush? No, these are the words of, respectively, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.

If Pelosi and Reid break these 2006 campaign promises, they won’t be the first politicians to do so. After all, FDR promised in 1932 to cut federal spending 25 percent, then embarked on the largest expansion of the central government in American history. But we think Pelosi and Reid are quite capable of doing better than that. There are three areas where we think it is especially vital that they keep their campaign promises.

First, Democrats favor a PAYGO process that requires that revenue to pay for a new program — cuts in existing programs or tax increases — must be identified before it can become established. Sounds good in theory, but PAYGO must not be allowed to become, as the Heritage Foundation put it, "a phony budget tool and a veil for new deficit spending."

That means making PAYGO a law, not merely a congressional process. It also means credibly enforcing PAYGO so senators and representatives can’t suspend it or create exceptions for special interests. PAYGO must apply to existing spending, including Social Security and Medicare, as well as to new spending proposals.

Second, there is talk of imposing punitive corporate taxes and new environmental and other regulations across the economy. Democrats must remember that no tax on business is ever paid by business. Taxes are paid by individual consumers, so raising a corporate income tax rate will simply be a backdoor tax increase on customers. Similarly, more regulations will drive up the cost of providing goods and services, all of which are paid for by people, not businesses. Tax simplification and regulatory relief are keys to economic progress.

Finally and most important, the entitlement crisis must be honestly confronted and resolved. Social Security and Medicare verge on bankruptcy and it’s time Democrats (and GOPers) admit that, except as excuses for stiff new tax hikes, those IOUs in the Social Security "lockbox" are worth no more than the figurative paper on which they are written. And Medicare’s exploding costs will only be made worse by imposing a one-payer system — aka "socialized medicine" — because government regulation is the main cause of spiraling health care costs in the first place.

The ultimatesolution to the entitlement crisis is to replace defined benefits — i.e. tax-paid government subsidies — with systems that give individuals and families choices on how their tax dollars for health care and retirement are spent. For Medicare, this means allowing all Americans to have the same broad range of choices enjoyed by federal civil servants with the Federal Employees Health Benefits Program.

For retirement, it means finding a way to put Social Security on a sound financial footing and allowing individuals to invest a portion of their taxes in an IRA-type Social Security component. Finding these solutions won’t be easy, but America routinely puts men and women in space and we can fix Medicare and Social Security, too.

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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